Sustainability isn’t about saving the planet. It’s about saving your business.
Conducting business in a sustainable manner means you can spend less and increase revenue.
While sustainability does help the planet, the incentive of reducing your business costs by half is a strong reason to pay attention. The buzz is that traditional energy and other resources will be in tight supply in the future, resulting in volatile prices. By investing in sustainable efforts now, you can help ensure your business’s long-term success.
“If you just continue business as usual and don’t implement sustainable practices, you’ll be poorly equipped to deal with arising circumstances,” says Joseph Fiksel, principal and co-founder of Eco-Nomics LLC, an internationally recognized authority on sustainability issues. “You’re creating a risk management issue for your company.”
Americans compose 5 percent of the world’s population, yet contribute almost 25 percent of the greenhouse gas pollution, which scientists believe causes global warming. If everyone used and wasted energy and other resources this way, we’d need four planet earths to keep up with the demand. Consumers are finally taking notice of this egregious waste and are looking to buy from sustainable businesses, while more and more businesses are looking to obtain products from other businesses using sustainable practices. This is a time when your business can not only streamline production but also increase revenue by drawing in new customers.
“Barack Obama was so specific about forming an energy plan, we’ll be seeing things change soon,” says T. Boone Pickens, founder and chairman of BP Capital Management. “This means businesses have to get going on where they’ll be standing when this comes in to play.”
Fiksel says sustainability doesn’t cost anything.
“Any investment you make is done for business reasons,” he says. “Sustainability will save money and increase stockholder value in your company. A pet peeve of mine is companies placing sustainability practices on the back burner when the cost of gas or energy goes down. All motivation is lost because they’ll be paying less for the energy sources they have and alternative energy looks less attractive. This way of thinking sets them back further and further.”
All of the readers polled by Smart Business say being green is an important part of their corporate philosophy, yet almost half report that they’re not willing to invest in greener practices. Experts say spending money on green initiatives isn’t paying for an image; it’s a direct investment in a more economic way of running your business.
Why sustainability is important
Think of sustainability like the Internet. Fifteen years ago, when the Internet was emerging, it wasn’t pervasive, but now it’s everywhere. Eventually, sustainable business will just be called business and green building will just be known as building. Experts say that is the way it’s going to be and you have to adapt now.
If you want to know the value in sustainable management, think about the Dow Jones Sustainability Index. For almost a decade, Dow Jones has been providing sustainability indexes of businesses, which shows objective benchmarks for financial products linked to economic, environmental and social criteria. Sustainability indexes offer a performance baseline and an investment value for mutual funds, certificates, separate accounts and other investment vehicles based on the concept of sustainability. To date, the assets managed amount to approximately $6 billion.
“Sustainability makes economic sense,” says John Seryak, president, Go Sustainable Energy LLC, an energy-efficiency company that works to find cost-saving opportunities.
“Companies that do not look into sustainability are exposed to commodity prices, and if they’re not looking into sustainability, there are probably other liability issues they’re not addressing.”
The need for sustainability has already created thousands of jobs stemming from business consultants to waste managers. Experts say we’ve only scratched the surface of what sustainable practices can do for businesses. While solar and wind power commonly come to mind, sustainability includes using recycled products when building, collecting rain for watering purposes and designing your business’s landscape in a way that minimizes the need for upkeep and conserving resources.
“Industry leaders are sustainable businesses and are considered visionaries,” says Pat Thompson, president, Green Business Insurance Inc. “Those who invest in sustainability enjoy reduced costs and more insurance options. Those who don’t look into sustainability are shortsighted and will likely only address the issue when they absolutely have to.”
While reducing waste has its obvious benefits, reduced insurance rates are another benefit to sustainable businesses. In fact, sustainability consultants predict business insurance will be more difficult to procure as nonsustainable practices are looked at as a risk.
In a 2008 report by SAB Miller, one of the world’s largest breweries, a survey of 4,000 senior executives showed 70 percent place corporate sustainability at the top of their priority list. That still leaves more than a quarter of businesses delaying action.
What you need to know
When initiating a sustainability plan, think about who your customers are and what they want. Consider how implementing sustainable practices can lead to more business. The challenge is making decisions that are financially, socially and environmentally intelligent. While there isn’t a one-size-fits-all plan, having a sustainability expert evaluate your business is a jumping-off point.
The Global Reporting Initiative is another ally for businesses seeking a sustainable route. It’s an organization that provides a framework companies can follow to measure and report their economic sustainability performance and monitor the performance of other companies. The organization sets the principles and indicators that businesses can use to measure and report their sustainability performance. GRI is growing as an international standard for corporate sustainability reporting.
“CEOs are sending the right message to employees when they do more with less,” Thompson says. “Right now, many businesses are letting sustainability take a backseat and they’re just trying to keep their doors open, but that’s not a great business approach. Sustainability can be a topic that brings enthusiasm and positive energy in difficult times.”
Another source for information comes from the U.S. Business Council for Sustainable Development, which was established in 2002 as a member-led, nonprofit organization that presents projects to demonstrate the business value of sustainable development. Projects featured by the council create value through economic returns and environmental and social benefits.
A sustainability consultant can help you identify what sustainable methods are available. After an assessment, you, along with department managers or those hired for the assignment, can construct an operational analysis that details your plans with set goals and deadlines. This will include your estimated ROI time frame. Make sure your sustainability plan describes how sustainability topics relate to long-term organizational strategy, risks and opportunities, including supply chain topics.
Even if you don’t implement everything in your sustainability plan today, you can re-evaluate and implement more sustainability methods in the future.
Make sure you are meeting all local and national protocols while setting some of your own standards. Define sustainability issues for your business based on your industry and the department. For example, if your business uses a lot of water, utilize rainwater recycling to minimize the amount of water you must purchase.
“Lack of information stops businesses from being sustainable,” Seryak says. “This means less services and products.”